Bow Valley Energy Ltd. announces 2007 results



    CALGARY, March 10 /CNW/ - Bow Valley Energy Ltd. (TSX - BVX) announces
its 2007 fourth quarter and full year summary financial and operational
results and the results of its 2007 oil and natural gas reserves evaluation by
GLJ Petroleum Consultants Ltd. and Senergy Ltd. (the "Reserve Report"). All
volumes referred to herein are to the Company's working interest share and all
volume and value comparisons are to the Company's prior reserve report (U.K.
continuing operations only) effective December 31, 2006.
    On April 30, 2007, the Company entered into an agreement with a third
party for the sale of its Canadian oil and natural gas interests which closed
on May 31, 2007. As a result, the Canadian operations have been accounted for
as discontinued operations and are excluded from the following financial and
operational results.

    
    HIGHLIGHTS

    -   The Company posted its strongest ever quarterly funds flow and
        earnings in the fourth quarter of 2007.

    -   Fourth quarter, 2007 funds flow was $22.2 million, an increase of
        4,572% over the fourth quarter of 2006. Fourth quarter funds flow per
        share (basic) was $0.26, an increase of 2,500% over the fourth
        quarter of 2006. Fourth quarter cash funds was greater than the
        previous four quarters, combined.

    -   2007 funds flow was $34.8 million, an increase of 285% from 2006.
        Funds flow per share was $0.43, an increase of 231% year-over-year.

    -   2007 net income per share was $0.29, an increase of 1,418% compared
        to 2006. Fourth quarter 2007 net income per share was $0.14, an
        increase of 280% compared to the fourth quarter of 2006.

    -   Sales volumes averaged 1,817 boe/d in 2007, an increase of 181%
        compared to 2006. Fourth quarter sales volumes averaged 3,769 boe/d,
        an increase of 629% compared to the fourth quarter of 2006.
        Production, including accruals and accrual adjustments averaged
        4,388 boe/d in the fourth quarter of 2007. Actual production for the
        fourth quarter was estimated to be 4,134 boe/d. As production
        exceeded sales, oil inventory grew by 57,300 barrels in the quarter,
        ending at 130,300 barrels.

    -   U.K. operating netbacks averaged $65.58 per boe for the full year
        2007 and $72.29 per boe for the fourth quarter of 2007. Operating
        costs (including transportation) averaged $6.31 per boe in 2007, a
        decrease of 23% per boe compared to 2006.

    -   Working capital deficiency was $131.4 million at year-end, including
        bank debt of $137.0 million. Net debt to current quarter funds flow
        (annualized) is equal to 1.5 times. The working capital deficiency
        does not include the fair value of the Company's $35.8 million
        investment in non-bank sponsored asset backed commercial paper
        ("ABCP"). Including the ABCP in the net debt to cash flow calculation
        reduces the figure to 1.1 times.

    -   The Company spent $196.6 million on capital costs in 2007. The
        capital costs were related to spending in respect of the Company's
        U.K. development assets portfolio ($85.4 million), U.K. acquisitions
        ($79.2 million), U.K. exploration ($3.1 million), Alaska
        ($16.3 million), and capitalized interest and other capital
        expenditures ($12.6 million).

    -   Proved plus probable reserves increased 100% to 26.7 million boe, due
        to the acquisition of an interest in the Peik field. Total proved
        reserves increased 36% to 6.7 million boe due to the Enoch and Blane
        fields reaching first production.

    -   The net present value (NPVBT10 forecast pricing) of proved plus
        probable reserves increased 103% to $711.6 million.

    -   The Company has fair valued its investment in ABCP as at December 31,
        2007 at $35.8 million representing a $5.3 million (13%) impairment.
        The Company recorded an unrealized foreign exchange gain of
        $27.7 million for 2007.

    -   Subsequent to the end of the year, the Company announced the results
        of the first well of a multi-well, multi-year exploration program in
        the U.K. The first well found a smaller than expected oil
        accumulation, and has been suspended pending further evaluation. The
        second well was dry. The Company expects to drill two to four
        exploration wells in the U.K. North Sea over the next twelve months.

    -   In its first drilling season in Alaska, in early 2007, the Company
        participated in two exploration wells, resulting in one oil discovery
        at Northshore No. 1 and one dry hole. The Northshore oil discovery
        was tested in the 2008 winter season, resulting in a final stabilized
        oil rate of 2,092 bopd (34 degrees API) from the Ivishak formation.
        The joint venture partners anticipate additional potential in the
        untested Sag River formation, as well as two similar, seismically
        defined, anomalies in close proximity. Success in these other
        opportunities will help to determine the commerciality of the project
        area.

    -   In March of 2008, the Tofkat No. 1 exploration well was drilled to a
        total depth at 7,703 feet true vertical depth (13,174 feet measured
        depth). The well encountered several zones which indicated
        hydrocarbon potential. These zones will be evaluated through logging
        and testing. A decision has been made to side track the well for
        appraisal after initial logging and testing is completed.



    FINANCIAL AND OPERATING SUMMARY TABLE

    -------------------------------------------------------------------------
                           Three Months Ended             Year Ended
                              December 31,                December 31,
                                             %                           %
                          2007      2006  Change      2007      2006  Change
    -------------------------------------------------------------------------
    Financial ($000s
     except as noted)
    Gross oil and
     gas revenue        27,658     2,925     846    49,189    15,963     208
    Funds flow          22,198       475   4,572    34,781     9,024     285
      Basic per share
       ($/share)          0.26      0.01   2,500      0.43      0.13     231
      Diluted per share
       ($/share)          0.26      0.01   2,500      0.42      0.12     250
    Earnings            11,823    (3,409)    447    23,304    (1,512)  1,641
      Basic and
       diluted per
       share ($/share)    0.14     (0.05)    384      0.29     (0.02)  1,418
    Debt and working
     capital
     (deficiency)     (131,418)  (91,397)    (44) (131,418)  (91,397)    (44)
    Capital
     expenditures
      Alaska             2,149         -     100    16,312     1,859     777
      United Kingdom    23,675    49,035     (52)  180,279    88,789     103
                      -------------------------------------------------------
      Total             25,824    49,035     (47)  196,591    90,648     117
    Shares outstanding
     (000s)
      Basic             86,109    72,772      18    86,109    72,772      18
    Weighted average
     (000s)
      Basic             86,109    70,490      22    81,486    69,700      17
      Diluted           86,891    72,797      19    82,954    72,278      15

    Operating
    Sales
      Natural gas
       (mcf/d)           3,342       902     270     2,137       722     196
      Oil and NGL
       (bbl/d)           3,212       367     775     1,461       527     177
                      -------------------------------------------------------
      Oil equivalent
       (boe/d) (6:1)     3,769       517     629     1,817       647     181

    Prices
      Natural gas
       ($/mcf)            4.48      8.66     (48)     6.35      6.33      nm
      Oil and NGL
       ($bbl/d)          87.28     67.68      29     81.62     74.47      10
                      -------------------------------------------------------
      Oil equivalent
       ($/boe) (6:1)     78.36     63.07      24     73.06     67.66       8

    Drilling activity
     (gross)
      Oil                    -         1    (100)        3         3       -
      Natural gas            -         -       -         -         -       -
      Abandoned              -         -       -         -         1    (100)
      Suspended              -         -       -         1         -     100
      Service                1         1     100         1         1     100
                      -------------------------------------------------------
      Total drilling
       activity (gross)      1         2     (50)        5         5       -

    Drilling activity
     (net)
      Oil                    -      0.12    (100)     0.44      0.36      22
      Natural gas            -         -       -         -         -       -
      Abandoned              -         -       -         -      0.12    (100)
      Suspended              -         -       -      0.20         -       -
      Service             0.12      0.15     (20)     0.12      0.15     (20)
                      -------------------------------------------------------
      Total drilling
       activity (net)     0.12      0.27     (56)     0.76      0.63      21
    -------------------------------------------------------------------------
    


    COMPANY UPDATE

    UNITED KINGDOM
    --------------
    2007 was the year of first production from two of the Company's
development assets. The Enoch field reached first production in May, 2007
while the Blane field reached first production in September, 2007. The
contribution from these fields drove production and sales significantly higher
in 2007 over 2006, dramatically so in the fourth quarter.
    Production, including accruals and accrual adjustments averaged
4,388 boe/d in the fourth quarter 2007 and 2,090 boe/d for the full year of
2007. Actual production for the fourth quarter was estimated to be
4,134 boe/d. Due to the delays in the timing of oil liftings, sales volumes
averaged 3,769 boe/d in the fourth quarter of 2007 and 1,817 boe/d for the
full year. As a result, the Company's oil inventory grew by 57,300 barrels in
the quarter, ending the year at 130,300 barrels. These barrels are valued on
the balance sheet in short term assets, at cost. If these barrels were fully
lifted in the fourth quarter, sales volumes would have been approximately
1,416 boe/d higher. The Company currently expects liftings in the first
quarter of 2008 to exceed production which is currently estimated between
3,700-4,000 boe/d. Caution is warranted however, as lifting schedules change
frequently.
    Operating costs (including transportation) averaged $6.31 per boe in
2007, a decrease of 23% over 2006. Operating costs are expected to trend
higher with Chestnut and Ettrick expected to come on stream in 2008. With
strong oil prices and low operating costs, the Company's operating netback
from U.K. operations increased strongly to $65.58 per boe in 2007 and
$72.29 per boe in the fourth quarter. These strong netbacks, combined with the
growing production and sales, led to fourth quarter funds flow which exceeded
the previous four quarters funds flow combined.
    The Company incurred capital expenditures of $167.7 million in the U.K.
in 2007 (not including capitalized interest and capitalized lease rental
costs). The majority of the capital spending ($85.4 million) was related to
the Company's asset developments. $79.2 million was spent on the acquisition
of a 66.67% working interest in Block 9/15a which contains a portion of the
Peik field. Senergy Ltd. attributed a discounted future net cash flow of
$207.1 million (NPVBT10 @ forecast pricing) to the Company's 35% unitized
working interest in this field. The remainder of U.K. capital spending was
related to exploration ($3.1 million).
    Total proved plus probable reserves increased 100% to 26.7 mmboe, due to
the acquisition of an interest in the Peik field. The net present value of
those reserves increased 103% to $711.6 million (NPVBT10 @ forecast pricing)
due largely to the increased volume of reserves and higher commodity prices.
Total proved reserves increased 36% to 6.7 million boe, due to the Enoch and
Blane fields reaching first production.

    
    -------------------------------------------------------------------------
                                           COMPANY WORKING INTEREST(1)
                                   ------------------------------------------
                                                    Reserves
                                   ------------------------------------------
                                       Oil        Gas        NGL        BOE
    Reserves Category                  Mbbl       Mmcf       mbbl       mboe
    -------------------------------------------------------------------------
    Proved
    -------------------------------------------------------------------------
      Producing                       3,588      4,154          0      4,280
    -------------------------------------------------------------------------
      Undeveloped                     2,274        974          0      2,436
    -------------------------------------------------------------------------
      Total Proved                    5,861      5,128          0      6,716
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Probable                          4,530     72,619      3,323     19,956
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Proved Plus Probable             10,391     77,747      3,323     26,672
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                          COMPANY WORKING INTEREST(1)
                                   ------------------------------------------
                                     Forecast (Forecast Pricing and Costs)
                                             NPVBT (Cdn$ million)
                                   ------------------------------------------
    Reserves Category                    0%         5%         8%        10%
    -------------------------------------------------------------------------
    Proved
    -------------------------------------------------------------------------
      Producing                       275.5      248.0      243.3      226.0
    -------------------------------------------------------------------------
      Undeveloped                      84.9       78.6       75.3       73.3
    -------------------------------------------------------------------------
      Total Proved                    360.4      326.7      309.6      299.2
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Probable                          869.2      586.4      472.7      412.4
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Proved Plus Probable             1229.5      913.1      782.3      711.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) From the Reserve Report effective December 31, 2007. Totals may not
        add due to rounding.
    

    Forecast production, as outlined in the total proved plus probable case
in the Reserve Report, is expected to average 5,834 boe/d in 2008 and increase
to 7,041 boe/d in 2009. Timing delays associated with bringing new fields on
production could cause production averages to differ from these figures, and
those differences could be material.
    More details regarding reserves information may be found in the Company's
NI 51-101 filings, contained within the Annual Information Form.

    ALASKA
    ------
    In the fourth quarter of 2006, the Company committed to participate in a
multi-well, multi-year exploration program on the North Slope of Alaska. The
Company agreed to fund approximately 28.57% of certain capital expenditures in
up to five wells to earn a 20% working interest in lands then held by the
operator.
    In its first drilling season in Alaska, in early 2007, the Company
participated in two exploration wells, resulting in one oil discovery at
Northshore No. 1 and one dry hole. The Northshore oil discovery was tested in
the 2008 winter season, resulting in a final stabilized oil rate of 2,092 bopd
(34 degrees API) from the Ivishak formation. The joint venture partners
anticipate additional potential in the untested Sag River formation, as well
as two similar, seismically defined, anomalies in close proximity. Success in
these other opportunities will help to determine the commerciality of the
project area.
    In March of 2008, the Tofkat No. 1 exploration well was drilled to a
total depth at 7,703 feet true vertical depth (13,174 feet measured depth).
The well encountered several zones which indicated hydrocarbon potential.
These zones will be evaluated through logging and testing. A decision has been
made to side track the well for appraisal after initial logging and testing is
completed.

    CORPORATE
    ---------
    The Company's working capital deficiency including bank debt was
$131.4 million due to the increased spending related to its U.K. development
projects as well as the acquisition of the Peik field. This debt is financed
via the Company's US$125 million senior, US$25 million mezzanine and
(pnds stlg)17.5 million term debt facilities with a syndicate of banks, led by
the Bank of Scotland. In addition, the Company has a US $30 million facility
with the National Bank, secured by the Company's investment in ABCP and
certain other guarantees.
    The Company invested a portion of the proceeds from the sale of its
Canadian assets in ABCP. Due to the liquidity issues facing the ABCP market,
and global credit conditions generally, the Company has fair valued its
investment in ABCP at $35.8 million, representing a $5.3 million (13%)
impairment.
    "In many ways 2007 was a year of transition as the Company shed its
western Canadian oil and natural gas assets while the international portfolio
emerged from an undeveloped status into a viable producing asset base," said
Robert G. Moffat, President and CEO of Bow Valley. "The very impressive
financial performance over the past three to six months validates the
Company's business strategy and the resultant diversified production base
establishes a platform from which the Company can execute a full-cycle
exploration program. We are very proud of the progress being made and have
every confidence in our future."
    The Company's statement of reserves data and other oil and gas
information on Form 51-101F1 has been included in the Company's Annual
Information Form for the year ended December 31, 2007 which has been filed on
SEDAR at www.sedar.com. The report on reserves data by independent qualified
reserves evaluator or auditor on Form 51-101F2 and the report of management
and directors on oil and gas disclosure on Form 51-101F3 has also been filed
on SEDAR at www.sedar.com.
    Copies of the financial statements and notes and related management
discussion and analysis and Annual Information Form may be obtained on SEDAR
at www.sedar.com, the Company website at www.bvenergy.com or by contacting the
Company directly.

    Bow Valley Energy Ltd. is an international oil and natural gas
exploration, development and production company with operations in the U.K.
sector of the North Sea and Alaska. The common shares of the Company trade on
the Toronto Stock Exchange under the symbol BVX.

    Some of the information contained herein summarizes certain information
contained in the GLJ Petroleum Consultants Ltd. and Senergy Ltd. reserve
reports with an effective date of December 31, 2007. Bow Valley will provide
additional information in its Annual Information Form and other filings. It
should not be assumed that the estimates of future net revenues presented in
the tables herein ("NPVBT10") represent the fair market value of the reserves.
There is no assurance that the price and cost assumptions will be attained and
variances could be material. The Bow Valley crude oil, natural gas liquids and
natural gas reserves and production volumes provided herein are estimates only
and there is no guarantee that the estimated reserves or production will be
realized. The actual crude oil, natural gas liquids and natural gas volumes
eventually recovered may be greater than or less than the reserves estimates
provided herein. Where amounts are expressed on a barrel of oil equivalent
(boe) basis, natural gas volumes have been converted to barrels of oil
equivalent at six thousand cubic feet to one barrel of oil equivalent (6 mcf
equals 1 boe). This conversion ratio is the conversion used in the oil and
natural gas industry and is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead. The use of boe's may be misleading, particularly
if used in isolation.
    Certain statements included or incorporated by reference in this news
release constitute forward-looking statements or forward-looking information
under applicable securities legislation. Such forward-looking statements or
information are provided for the purpose of providing information about
management's current expectations and plans relating to the future. Readers
are cautioned that reliance on such information may not be appropriate for
other purposes, such as making investment decisions. Forward-looking
statements or information typically contain statements with words such as
"anticipate", "believe", "expect", "plan", "intend", "estimate", "propose",
"project" or similar words suggesting future outcomes or statements regarding
an outlook. Forward-looking statements or information in this news release
include, but are not limited to, statements or information with respect to:
business strategy and objectives; development plans; exploration plans;
acquisition and disposition plans and the timing thereof; reserve quantities
and the discounted present value of future net cash flows from such reserves;
future production levels; capital expenditures; net revenue; operating and
other costs; royalty rates and taxes.
    Forward-looking statements or information are based on a number of
factors and assumptions which have been used to develop such statements and
information but which may prove to be incorrect. Although the Company believes
that the expectations reflected in such forward-looking statements or
information are reasonable, undue reliance should not be placed on
forward-looking statements because the Company can give no assurance that such
expectations will prove to be correct. In addition to other factors and
assumptions which may be identified in this news release, assumptions have
been made regarding, among other things: the impact of increasing competition;
the general stability of the economic and political environment in which the
Company operates; the timely receipt of any required regulatory approvals; the
ability of the Company to obtain qualified staff, equipment and services in a
timely and cost efficient manner; the ability of the operator of the projects
which the Company has an interest in to operate the field in a safe, efficient
and effective manner; the ability of the Company to obtain financing on
acceptable terms; field production rates and decline rates; the ability to
replace and expand oil and natural gas reserves through acquisition,
development or exploration; the timing and costs of pipeline, storage and
facility construction and expansion and the ability of the Company to secure
adequate product transportation; future oil and natural gas prices; currency,
exchange and interest rates; the regulatory framework regarding royalties,
taxes and environmental matters in the countries in which the Company
operates; and the ability of the Company to successfully market its oil and
natural gas products. Readers are cautioned that the foregoing list is not
exhaustive of all factors and assumptions which may have been used.
    Forward-looking statements or information are based on current
expectations, estimates and projections that involve a number of risks and
uncertainties which could cause actual results to differ materially from those
anticipated by the Company and described in the forward-looking statements or
information. These risks and uncertainties which may cause actual results to
differ materially from the forward-looking statements or information include,
among other things: the ability of management to execute its business plan;
general economic and business conditions; the risk of war or instability
affecting countries in which the Company operates; the risks of the oil and
natural gas industry, such as operational risks in exploring for, developing
and producing crude oil and natural gas and market demand; the possibility
that government policies or laws may change or governmental approvals may be
delayed or withheld; risks and uncertainties involving geology of oil and
natural gas deposits; the uncertainty of reserves estimates and reserves life;
the ability of the Company to add production and reserves through acquisition,
development and exploration activities; the Company's ability to enter into or
renew leases; potential delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of estimates
and projections relating to production (including decline rates), costs and
expenses; fluctuations in oil and natural gas prices, foreign currency,
exchange, and interest rates; risks inherent in the Company's marketing
operations, including credit risk; uncertainty in amounts and timing of
royalty payments; health, safety and environmental risks; risks associated
with existing and potential future law suits and regulatory actions against
the Company; uncertainties as to the availability and cost of financing; and
financial risks affecting the value of the Company's investments. Readers are
cautioned that the foregoing list is not exhaustive of all possible risks and
uncertainties. Additional risk factors affecting the Company and its business
are contained in the Company's Annual Information Form filed on SEDAR at
www.sedar.com.
    The forward-looking statements or information contained in this news
release are made as of the date hereof and the Company undertakes no
obligation to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events or
otherwise unless required by applicable securities laws. The forward-looking
statements or information contained in this news release are expressly
qualified by this cautionary statement.

    %SEDAR: 00008379E




For further information:

For further information: Bow Valley Energy Ltd.: Robert G. Moffat,
President and Chief Executive Officer, Matthew L. Janisch, Vice President
Finance & Chief Financial Officer, Phone (403) 232-0292, website:
www.bvenergy.com

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BOW VALLEY ENERGY LTD.

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